Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as rising global growth fears, US "fiscal cliff" concerns and rising food/energy prices offset short-covering, global central bank stimulus hopes and technical buying. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,390.99 +.36%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,390.99 +.36%
  
• DJIA 13,096.10 +.16%
  
• NASDAQ 2,967.90 +.33%
  
• Russell 2000 788.48 -.95%
  
• Value Line Geometric(broad market) 341.98 -.53%
  
• Russell 1000 Growth 647.62 +.28%
  
• Russell 1000 Value 683.03 +.29%
  
• Morgan Stanley Consumer 807.92 -.81%
  
• Morgan Stanley Cyclical 914.79 +.09%
• Morgan Stanley Technology 659.38 +.82%
  
• Transports 5,086.31 -.79%
  
• Utilities 491.08 -.67%
• Bloomberg European Bank/Financial Services 74.46 +3.56%
  
• MSCI Emerging Markets 39.54 +1.50%
  
• Lyxor L/S Equity Long Bias 1,025.87 +1.12%
  
• Lyxor L/S Equity Variable Bias 799.79 -.02%
  
• Lyxor L/S Equity Short Bias 539.44 unch.
  

Sentiment/Internals

• NYSE Cumulative A/D Line 148,217 -.08%
  
• Bloomberg New Highs-Lows Index -157 -147
  
• Bloomberg Crude Oil % Bulls 30.0 unch.
  
• CFTC Oil Net Speculative Position 174,397 -8.55%
  
• CFTC Oil Total Open Interest 1,395,758 +.48%
  
• Total Put/Call .84 -4.55%
  
• OEX Put/Call 1.29 +55.42%
  
• ISE Sentiment 120.0 -9.09%
  
• NYSE Arms .60 +122.22%
  
• Volatility(VIX) 15.64 -6.34%
• S&P 500 Implied Correlation 64.32 -3.78%
  
• G7 Currency Volatility (VXY) 8.77 -3.73%
  
• Smart Money Flow Index 11,275.39 -.46%
  
• Money Mkt Mutual Fund Assets $2.551 Trillion -.20%
  
• AAII % Bulls 30.45 +8.29%
  
• AAII % Bears 34.93 -19.01%

Futures Spot Prices

• CRB Index 300.69 +.36%
  
• Crude Oil 91.40 +1.26%
  
• Reformulated Gasoline 293.10 +4.90%
  
• Natural Gas 2.88 -5.33%
  
• Heating Oil 292.61 +1.18%
  
• Gold 1,690.30 -1.10%
  
• Bloomberg Base Metals Index 189.97 -2.80%
  
• Copper 336.75 -1.98%
  
• US No. 1 Heavy Melt Scrap Steel 315.0 USD/Ton -9.4%
  
• China Iron Ore Spot 116.70 USD/Ton +.43%
  
• Lumber 286.40 -.17%
  
• UBS-Bloomberg Agriculture 1,744.80 +.81%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate -1.30% +30 basis points
  
• Philly Fed ADS Real-Time Business Conditions Index -.0152 -.66%
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 110.11 +.03%
  
• Citi US Economic Surprise Index -36.20 +14.8 points
  
• Fed Fund Futures imply 56.0% chance of no change, 44.0% chance of 25 basis point cut on 9/13
  
• US Dollar Index 82.37 -.28%
  
• Yield Curve 132.0 +2 basis points
  
• 10-Year US Treasury Yield 1.56% +1 basis point
  
• Federal Reserve's Balance Sheet $2.834 Trillion +.03%
  
• U.S. Sovereign Debt Credit Default Swap 45.50 +.87%
  
• Illinois Municipal Debt Credit Default Swap 229.0 -3.09%
  
• Western Europe Sovereign Debt Credit Default Swap Index 251.40 -3.92%
  
• Emerging Markets Sovereign Debt CDS Index 233.05 -8.64%
  
• Saudi Sovereign Debt Credit Default Swap 103.31 -2.99%
• Iraq Sovereign Debt Credit Default Swap 454.74 +8.15%
  
• China Blended Corporate Spread Index 454.0 -13 basis points
  
• 10-Year TIPS Spread 2.16% +8 basis points
  
• TED Spread 36.25 +1.75 basis points
  
• 2-Year Swap Spread 20.25 -1.0 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -39.5 +2.0 basis points
  
• N. America Investment Grade Credit Default Swap Index 103.40 -4.52%
  
• European Financial Sector Credit Default Swap Index 245.42 -8.40%
  
• Emerging Markets Credit Default Swap Index 247.46 +.94%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 149.0 -6 basis points
  
• M1 Money Supply $2.327 Trillion unch.
  
• Commercial Paper Outstanding 1,034.40 +3.20%
  
• 4-Week Moving Average of Jobless Claims 365,500 -1,800
  
• Continuing Claims Unemployment Rate 2.6% unch.
  
• Average 30-Year Mortgage Rate 3.55% +6 basis points
  
• Weekly Mortgage Applications 945.70 +.22%
  
• Bloomberg Consumer Comfort -39.7 -1.2 points
  
• Weekly Retail Sales +1.6% -10 basis points
  
• Nationwide Gas $3.57/gallon +.08/gallon
  
• U.S. Cooling Demand Next 7 Days 16.0% above normal
• Baltic Dry Index 852.0 -8.68%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 22.50 -10.0%
  
• Rail Freight Carloads 250,319 +1.56%
  

Best Performing Style

• Large-Cap Value +.29%
  

Worst Performing Style

• Small-Cap Growth -1.25%

Leading Sectors

• Networking +3.01%
  
• Construction +2.28%
• Semi +1.53%
• Steel +1.45%
• Hospital +1.23%

Lagging Sectors

• Disk Drive -3.48%
• Biotech -3.85%
  
• HMO -5.97%
• I-Banking -6.22%
• Education -8.09%

Weekly High-Volume Stock Gainers (29)

• SHAW, CRUS, AH, ELLI, MDAS, FSLR, SNCR, IDCC, MDSO, IPGP, CODE, TRS, MIC, DIN, MTZ, KBALB, KLIC, FNGN, DOLE, NFP, ECOL, BNNY, SLCA, ACAS, ONE, FET, HBI, MED and ROP
  

Weekly High-Volume Stock Losers (45)

• LF, CENT, NYX, BCOR, TECH, AEGR, TNS, SBUX, HOS, CSTR, CRAY, LQDT, AUXL, MGRC, DWA, AWI, BBRG, PPO, FB, HUM, RPXC, LPSN, KRA, MG, SEE, CNW, INT, LOGM, LPLA, COH, SLXP, ENR, TWGP, CHEF, DRIV, TRLG, ANF, ADVS, LUFK, ADNC, RXN, FARO, ACTG, INCY and ARO
  

Weekly Charts
ETFs

• High-Volume Gainers
• High-Volume Losers

Stocks

• High-Volume Gainers
• High-Volume Losers
  

*5-Day Change

Stocks Surging into Final Hour on Less Eurozone Debt Angst, Short-Covering, Technical Buying, Investor Performance Angst

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Slightly Above Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 16.13 -8.20%
  
• ISE Sentiment Index 122.0 +45.24%
  
• Total Put/Call .83 -9.78%
  
• NYSE Arms .70 -68.0%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 103.56 bps -4.98%
  
• European Financial Sector CDS Index 245.41 bps -12.0%
  
• Western Europe Sovereign Debt CDS Index 262.09 -3.61%
  
• Emerging Market CDS Index 246.78 -3.18%
  
• 2-Year Swap Spread 20.50 -.75 basis point
  
• TED Spread 36.25 +.75 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -39.5 +6.75 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .08% -1 basis point
  
• Yield Curve 133.0 +8 basis points
  
• China Import Iron Ore Spot $116.70/Metric Tonne -.34%
  
• Citi US Economic Surprise Index -36.20 +3.5 points
  
• 10-Year TIPS Spread 2.16 +6 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating +119 open in Japan
• DAX Futures: Indicating +7 open in Germany
  

Portfolio:

• Higher: On gains in my Retail, Medical, Tech and Biotech sector longs
  
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• Merkel's Coalition Members Signal Acceptance of ECB Bond-Buying. Members of German Chancellor Angela Merkel’s coalition parties signaled they won’t stand in the way of European Central Bank chief Mario Draghi’s plan to buy government bonds. The envisaged move to purchase troubled euro states’ government bonds is “a wise middle way” to solve the region’s debt crisis, Elmar Brok, a European Parliament lawmaker and executive-committee member of Merkel’s Christian Democratic Union party, told Deutschlandfunk radio today. Norbert Barthle, CDU budget spokesman, said that German lawmakers will have veto rights over bond purchases by the euro- area’s rescue funds, which would operate in tandem with the ECB under Draghi’s proposal. The temporary fund “was created for a purpose and bond-buying is in the manual,” Barthle said yesterday by phone. With Merkel on vacation for another week and parliament in summer recess, there was no official government reaction to Draghi’s announcement yesterday of a blueprint to ease bond markets and lower borrowing costs for Italy and Spain in return for strict conditions. In her last statement on the crisis, on July 29, Merkel echoed Draghi’s language, saying that she will do everything to protect the euro. Economy Minister Philipp Roesler, whose Free Democratic Party is Merkel’s junior coalition partner and has been skeptical of bailouts, said the ECB should “focus on its core mandate” of safeguarding monetary stability, according to an interview in the Passauer Neue Presse newspaper.
• Rajoy Will Consider Bond Buying Request to Protect Spain. Spain’s Prime Minister Mariano Rajoy said he would consider asking Europe’s bailout funds to buy Spanish debt if it were for the best for the country, as he called for a crisis meeting of the region’s finance chiefs. “I will do what I always do, act in the best interest of Spaniards,” Rajoy said at a news conference in Madrid today, when asked whether he would consider making a request. He needs to see more details on what the European Central Bank is planning in terms of bond buying and non-conventional measures before taking any decision on seeking support, he said.
• German ESM Liabilities Have Fixed Ceiling, Kampeter Says. Germany’s financial liabilities toward the European Stability Mechanism, the euro-area’s permanent bailout fund, can’t surpass a fixed ceiling, Deputy Finance Minister Steffen Kampeter told Frankfurter Allgemeine Zeitung in a response to critics. Some economists have interpreted the ESM contract as foisting unlimited liabilities on Germany under certain scenarios, Kampeter said in a guest column. No ESM clauses can force Germany to raise its input to the ESM above the agreed amount of 190 billion euros ($232 billion), in line with the country’s economic weighting in the euro area, Kampeter said.
• U.K. to Miss Deficit Target as Economy Shrinks 0.5%, Niesr Says. The British economy will shrink by 0.5 percent this year, forcing Chancellor of the Exchequer George Osborne to miss his budget-deficit target, said the National Institute of Economic and Social Research. The economic deterioration has been “even more pronounced” than previously forecast as private-sector retrenchment is made worse by fiscal consolidation and a “dysfunctional” financial system, the London-based research group said a quarterly report published today. Osborne will borrow 12.5 billion pounds ($19.5 billion) more than planned in the year through March 2013, Niesr said.
• UN Passes Symbolic Syria Measure as Ban Evokes Genocides. United Nations Secretary-General Ban Ki-moon, calling the Syrian conflict a “catastrophe,” drew parallels between the genocides in Bosnia and Rwanda and possible war crimes in a “vicious” battle for control of Aleppo, Syria’s most populous city. “The acts of brutality that are being reported may constitute crimes against humanity,” Ban told the UN General Assembly. “What is especially tragic about Syria is that this catastrophe was avoidable,” and now all “dire predictions have come to pass.”
• Luxury Watch Sales Show China Failing to Secure Economic Rebound. (graph) China’s economy, the world’s second- biggest, is yet to rebound according to one gauge: sales of the luxury watches that business people give to clients and officials to build commercial relationships. Eleven of 13 shops and chains surveyed in Hong Kong by Bloomberg News reported no pick-up in July in purchases by mainland Chinese customers. Watch, clock and jewelry sales in the city gained 3.1 percent in June from a year earlier, down from a 59 percent increase in the same month in 2011, according to government data released yesterday.
• Jobs Gains Top Forecasts Even as Unemployment Rate Ticks Higher. The payrolls increase of 163,000 followed a revised 64,000 gain in June, Labor Department figures showed today in Washington. The median estimate of 89 economists surveyed by Bloomberg called for a gain of 100,000. The jobless rate, based on a separate survey of households, climbed to a five-month high of 8.3 percent. “Today’s numbers are better but not good enough,” said Brian Jones, a senior U.S. economist for Societe Generale SA in New York, who predicted payrolls would rise by 165,000. “We’re stuck in a channel of lackluster growth.” Construction companies cut payrolls by 1,000 workers, while retailers added 6,700. Factory payrolls rose by 25,000, more than twice the survey forecast of a 10,000 increase and boosted by a 12,800 pickup in employment at makers of motor vehicles and parts. The figures may have reflected fewer shutdowns at automakers for annual retooling related to the new model year, indicating the jump will be reversed this month. The number of people out of work for 27 weeks or more decreased as a percentage of all jobless, to 40.7 percent, from 41.9 percent. The unemployment rate was forecast to hold at 8.2 percent, according to the survey median. Estimates in the Bloomberg survey ranged from 8.1 percent to 8.3 percent. The report showed more people left the labor force. The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- increased to 15 percent from 14.9 percent.
• Service Industries in U.S. Expanded at Faster Pace in July. The Institute for Supply Management’s non-manufacturing index rose to 52.6, from 52.1 in June, the Tempe, Arizona-based group said today. The median forecast of 73 economists surveyed by Bloomberg called for no change from June. The measure is below the 54.2 average over the last six months, indicating services that make up almost 90 percent of the economy are hindered by slower global growth and concerns about the so-called U.S. fiscal cliff. The group’s gauge of employment fell to the lowest level since September, a sign households may also stay reluctant to step up purchases.
• Knight Capital(KCG) Shares Rally After Report of Credit Line. Knight Capital Group Inc. (KCG) shares rallied following a report the firm advised some clients it obtained a line of credit, easing concern the market maker will collapse following a $440 million loss from a software bug. Knight shares jumped 23 percent to $3.17 at 9:47 a.m. after the Wall Street Journal said the credit line will allow the company to operate for the day and Knight asked firms to resume routing trades as usual. The newspaper cited people familiar with the matter. Knight spokeswoman Kara Fitzsimmons didn’t immediately respond to requests for comment. The shares had plunged 75 percent in the previous two sessions.
• Lennar(LEN) Nears Chinese Loan for San Francisco Projects, Mayor Says. Lennar Corp. (LEN) is close to signing a term sheet with China Development Bank for a $1.7 billion loan package that would revive two stalled real estate projects in San Francisco, Mayor Edwin Lee said. “We’re a couple months away” from agreeing on financial terms, Lee said in an Aug. 1 interview at San Francisco City Hall, his first public comments on the loan. “This is very important to our city, and we’re not letting it go.”
• Oil Surges Most In A Month. Crude oil for September delivery rose $4.29, or 4.9 percent, to $91.42 a barrel at 1:23 p.m. on the New York Mercantile Exchange. Futures are headed for the biggest gain since June 29. Prices are up 1.4 percent this week, and have dropped 7.5 percent this year. Brent oil for September settlement advanced $2.75, or 2.6 percent, to $108.65 a barrel on the London-based ICE Futures Europe exchange.

CNBC.com:

• Spain Budget Drive Threatened by Rampant Tax Fraud. At the height of Spain's construction boom it was not uncommon for a briefcase of 500-euro bills to be offered as part payment for property by buyers striving to save on taxes.
• Global Manufacturers Feel Squeeze From China Slowdown. Investors hoping the corporate earnings season would signal a turning point in China's economic slowdown have been largely disappointed, with big manufacturers joining consumer companies to warn of flagging sales in the world's No.2 economy.
• European Firms Hit by Sharp Drop in New Orders. A sharp drop in new orders compounded the misery among euro zone companies during July, a business survey showed on Friday, forcing firms to lay off staff at the fastest pace since January 2010.

Business Insider:

• France To Raise Top Tax Rate To Shocking 75%.
• The Olympics Called A 'Complete And Utter Disaster' For London Businesses.
• America Is Missing 11 Million Workers.
• Here's The Part Of Facebook's(FB) Earnings Call That Caused The Stock To Crash.
• WATCH: Jon Stewart Slams Mayors For Rejecting Chick-Fil-A And The First Amendment.
• CHART OF THE DAY: The Scariest Jobs Chart EVER.

Zero Hedge:

• Full-Time Jobs -197,000; Part-Time Jobs +31,000. (graph)
• Russia Sends Three Warships To Syria Carrying Hundreds Of Marines.
• Promises Of More QE Are No Longer Sufficient: Desperate Banks Demand Reserves, Get First Fed Repo In 4 Years.
• Treasury Selling Another $4.5 Billion In AIG Stock, AIG To Buy $3 Billion Of Offering.

ABC News:

• White House Chief of Staff Daley Was Briefed on Solyndra Concerns, Email Says. Buried in the treasure trove of White House emails related to Solyndra released Thursday by the House Energy and Commerce Committee is one suggesting that concerns about Solyndra’s viability were shared all the way up to then-White House Chief of Staff Bill Daley a full six months before the company went bust.

Reuters:

• Germany's Weidmann draws on diplomatic skills in ECB fight. German central bank chief Jens Weidmann is locked in an increasingly tense and high-stakes struggle with European Central Bank President Mario Draghi over the ECB's policy response to the euro zone crisis. Draghi on Thursday indicated the ECB could intervene in debt markets again to reduce Spain and Italy's crippling debt costs but he held back from announcing concrete steps. He promised last week that the central bank would do "whatever it takes" to preserve the euro, raising expectations of action as soon as this week. But the powerful Bundesbank, the central bank of Europe's largest economy, is fiercely opposed to fresh ECB bond buying on the grounds that it amounts to monetary financing of governments, contravening European law.

Telegraph:

• Downturn 'entrenched' in Germany amid poor eurozone PMI. Eurozone private sector activity contracted for the 10th time in 11 months in July, with data now consistently showing the downturn becoming "entrenched" in Germany, a key survey has showed.
• Banks face 'wrenching times' warns RBS chief. RBS chief executive Stephen Hester has warned banks face "wrenching times" in the next few years.
• British Airways owner IAG plans for Spanish exit from eurozone. The parent company of British Airways and Iberia has drawn up advanced plans for what it would do in the event of a Spanish exit from the eurozone.

Business Spectator:

• Draghi's Challenge to End Euro Dysfunction by Stephen King, FT. The eurozone crisis may have started out as a fiscal crisis but it is now most definitely also a monetary crisis. The eurozone’s monetary system has begun to fragment. No longer is the European Central Bank able to set interest rates for the eurozone as a whole. Paranoia about an eventual eurozone break-up has persuaded financial institutions – with some encouragement from national regulators – to keep their money at home. So, the cross-border interbank market is more or less shut and peripheral nations are suffering.

Handelsblatt:

• Draghi and Weidmann Failed to Reach Compromise. Talks between ECB President Mario Draghi and Bundesbank President Jens Weidmann over central banks' roles in addressing the debt crisis failed over the last week, citing Frankfurt-based central bankers. ECB executive board member Joerg Asmussen tried to mediate between Draghi and Weidmann last weekend by phone, but positions were "too far apart". Weidmann "resorts to legal positions and rejects pragmatic crisis management," the central bankers said.
  

Ansa:

• Finance ministers from the euro area will meet on September 3 to discuss the economic situation in Greece and the possible action by the region's rescue fund to buy Spanish bonds, citing European officials.
  

Asahi Kasei:

• Asahi Kasei Shutters US Spandex Business on Weak Demand. The global spandex market has been extremely challenging in recent years, with oversupply putting downward pressure on sales prices even as feedstock costs remain persistently high. Particularly in the US, where market demand has been weak ever since the global financial crisis of 2008, satisfactory business performance has been difficult to achieve. In an effort to revitalize its US business, Asahi Kasei Spandex America, Inc. made every effort to reduce operating costs and achieve improved conditions. Having exhausted such efforts and with no foreseeable prospect for a major recovery in the US market, Asahi Kasei Fibers concluded that further investment in its US spandex business could no longer be justified. Therefore, it was decided that the manufacture of spandex at Asahi Kasei Spandex America, Inc., would be discontinued, effective October 2012.

Bear Radar

Style Underperformer:

• Large-Cap Growth +1.79%

Sector Underperformers:

• 1) HMOs -1.60% 2) Telecom +.14% 3) Alt Energy +.75%

Stocks Falling on Unusual Volume:

• ACTV, MCP, CVS, EROC, PKT, SWN, MTSI, SCOR, ICFI, OMPI, MNTA, NTLS, VSAT, INCY, SQI, CNQR, LPLA, IMGN, ATVI, SPTN, HCII, HAYN, PRAA, CAH, GVA, KYN, WCG, DLB and HNT
  

Stocks With Unusual Put Option Activity:

• 1) CNX 2) AGO 3) GT 4) MCP 5) UPL
  

Stocks With Most Negative News Mentions:

• 1) ZIP 2) ONNN 3) BDX 4) ATRC 5) HNT
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume